“I don’t advocate for shutting the government down, but neither do I advocate for keeping it open and borrowing $1 million a minute. In fact, the statistics this year are closer to $2 million a minute,” Paul claimed. “This is a government that is horribly broken.”He's right. In fact $1 million a minute is too optimistic. The official number from the Federal Reserve Bank of St. Louis (FRED) is that in 2017 the US ran a budget deficit of $666 billion. The conversion is easy, and if you count every minute of the year (all 525,600 of them), that gives a spending rate of $1.27 Million per minute. The budget plan is projecting a deficit of $800 billion in FY '18. That's $1.52 Million per minute. The Committee for a Responsible Federal Budget (CRFB), an independent think tank, projects that the deficit for FY '19 will balloon to $1.2 trillion in FY 2019, or $2.3 million per minute.
Daily Caller's Fact Check.
Long time readers will know that I'm a deficit hawk and believe this is eventually has to stop; a classic example of "things that can't go on forever, won't go on forever". The amount of borrowing has to eventually hit a stop. The world isn't infinite, and neither is money that's worth anything.
These, though, are unprecedented times. First and foremost is that while the market appears to have firm foundations for the first time in a long time; to borrow a line from Tom Aspray in Forbes:
Therefore, those who look at the market from a fundamental standpoint have trouble turning bearish right now, since the only fundamental concern is rising rates, while earnings and the economy are strong.Simply, in a week the major indices retreated back in time two months to the second week of December. The companies that were reporting earnings were reporting good, solid earnings and there's no reason to think they're less valuable than they were two weeks prior. There's simply no reason to dump those stocks. Unless the concern is looking forward into the year and wondering if the Fed is going to raise interest rates more than originally slated. Very simply, money chases yield and if bond yields go up, that would tend to move money out of the stock markets and into bonds.
Why would the Fed raise interest rates? That's their response to too much inflation and the Fed seems institutionally unable to separate its own currency manipulations from inflation or recession. For the last decade they've been telling us inflation is under 2% as we've paid more for smaller packages and watched what appears to be 8 to 10% inflation every year (Shadowstats, in 1980 terms, bottom graph). None of that bothered them, but increases in wages have them ringing the klaxons and preparing for disaster.
Trump is the first president I can think of who has specifically stated he wants to raise wages for the middle class and there's evidence it's happening. Rising wages are something that Janet Yellen and Ben Bernanke before her always talked about as if it was the apocalypse. One of the main aims of the Fed seemed to have been to keep wages from rising - and they seem to have been effective at doing it.
The point is, though, Rand Paul was right. The country is borrowing more than a million dollars a minute, and that can't go on. It might not crash this year, or next year, but it will sooner or later and it's better to try to land a crippled aircraft than wait until its really desperately awful trouble. The answer, as it has always been, has to be to stop kicking the can down the road, and start cutting spending and working toward balanced budgets. Which requires being adults, and very, very few in Washington have shown that tendency - as the president's proposed $1-1/2 Trillion dollar infrastructure plan shows.
There's always a greater or lesser amount of repair needed after Democrats leave office. It's like renting a house to frat boys-what did you think would happen? Oh, and, anyone seen my key caps?ReplyDelete
Bette Middler is a C*** and should be ignored. If anyone should quote her or her ilk they should likewise be ignored. Lame stream media is useless because they are the "hive mind" and all think alike.....Sad state of our country to listen to "actors and musicians" SJW III (NOT A"SOCIAL JUSTICE WARRIOR" USAF PJReplyDelete
Bette needs a neighbor like me......SJW IIIReplyDelete
Nobody wants to talk about mandatory spending. As long as that is off the table, there's not much to say. Everyone wants free cheese.ReplyDelete
@LL Exactly. Mandatory spending includes entitlements like Medicare, Social Security, VA benefits, etc. which are REQUIRED by law to be paid. Interest on the debt must also be paid. The money that must be paid totals about $2.5 trillion a year. That's right: Social Security, interest on the debt, Medicare, and the like already total more than we take in through taxes.ReplyDelete
Any discussion of balancing the budget must begin there, but any politician who advocates cutting SS or Medicare will be able to measure his remaining career in milliseconds.
Do not make that mistake of conflating Medicare with medicaid. The medicare recipients payed into that system all their lives. You could argue that they didn't pay 100% of the costs but never the less they made a contract with the government and payed and payed and payed for 47 years and the health care after age 65 is the governments side of that contract. Medicaid is "free shit". The recipients payed nothing into the system and in fact many of those recipients are not even citizens.Delete
Ditto with SS. Our government should take SS out of the general fund and keep their hands off it.
Our biggest problems is the 2400 various and well hidden welfare programs which cost us about $1.5 trillion (at the federal level) a year. It is "free shit" and needs to be reigned in.
As for VA benefits, feel free to run for office telling voters you don't want to pay the costs of soldiers injuries. Yeah! That sounds like a winner.
There are plenty of valid benefits being paid out but what no one seems to ever mention is the amount of fraud and outright theft that goes on as the system is scammed for so much of that budget. There is an underground network that enables many, including illegals, to claim benefits through fraudulent efforts. Plenty of money to be saved if the right efforts were made to clean things up.Delete
LL and Divemedic - Exactly right. The root problem is that the congresscritters treat mandatory spending as if they don't need to think about it, instead of asking "what's left to spend when we're done with mandatory spending?" before doing anything else.ReplyDelete
When was it that the Democrats moved social security to that separate status so that it doesn't look like it's on the budget?
So we're in this odd mode where veterans benefits, which are earned under contract and part of compensation for enlisting, are considered "entitlements". Likewise social security, which was certainly not voluntary (try not paying it for a while), and could have/should have been planned for in a meaningful way but instead was raided for funds. And raided for payments to people who never paid into it.
It's a giant fustercluck set up by politicians to buy votes and it is going to crash the country sooner or later.
Everything goes pear-shaped in the span 2032-2034, assuming current trends remain. That's when social security, medicare, welfare, and interest on the debt EACH make up over 50% of all federal spending. It's also when the IOUs filling the social security "lock box" run out.Delete
About $4 trillion was taken by our government from SS since the mid 50's. NONE of that was ever paid back. Don't kid yourself into thinking that "IOUs are filling the social security lock box".Delete
Being from Kentucky, I call Rand our only good Senator. Eartle the Turtle is a Dem in sheeps clothing. He NEVER stood up to obummer, once. The man has no spine-is a jellyfish. Yellowbelly from rolling on his back and peeing on his belly.ReplyDelete
Next time Rand, shut er down a little longer and wake these idiots up.
The national debt is increasing at a rate of over $25,000 per second. Anyone who says this is sustainable better be able to fork over the cash.ReplyDelete
On the other hand:ReplyDelete
It's a fundamental truth that so many people - especially big government type - don't understand that tax rates are not the same as tax revenues. The only thing even moderately surprising about this is that it was a very quick turnaround.Delete
It's also another truth that Donald Rumsfeld nailed that there are known unknowns (the things we know we don't know) and unknown unknowns (things we don't even know that we don't know). The farther into the future you try to predict, the more of those unknown unknowns come into play.
The first paragraph is why I don't respect the CBO saying the tax cuts will cost money. The second one is why I put little faith in numbers when people predict when everything goes to crap. They're all based on linear predictions and the future never works that way. Go back to 2006 and tell me how many people you find predicting an awful fiscal crisis in 2008. I know there were some; I was reading some, but they weren't very specific about when it would happen or how bad it would be.
There aren't many chances that the future works out, but what little there is depends on robust growth. Not inflation, not digitizing money out of thin air, but actual wealth creation-type growth. It is possible, but I couldn't put a number on that.
My bet is that number depends on whether or not the Deep State is stopped from their ongoing treason and sedition, and how many of its members are publicly executed for same. Air Pinochet may need to fly again, although hopefully this time it would use C-130s, C-17s, or C-5Ms instead of piddly little helicopters.Delete